Opendoor Makes Progress, But Is It Enough to Make the Stock a Buy?

It wouldn't be an understatement to suggest that Opendoor Technologies (NASDAQ: OPEN) hit the reset button in 2025. It parted ways with its CEO and brought in a new one who planned to lean into artificial intelligence to make the company's house-flipping business more productive. Specific targets were laid out for investors to monitor, and so far, the company appears to be making progress.

Three big goals

When new CEO Kaz Nejatian stepped into the job, he took some time to get to know Opendoor. And then he provided investors with three broad yardsticks to track whether the company was moving in the right direction. The goals were to 1) Scale Acquisitions, 2) Improve Unit Economics and Resale Velocity, and 3) Build Operating Leverage.

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Progress was made on each one. For example, fourth quarter 2025 home acquisitions rose 46% from the third quarter of the year, when the company's new business direction was unveiled. It reduced the percentage of homes it owned that had been on the market for 120 days from 55% to 33% of the portfolio. And operating expenses fell between the third and fourth quarters of 2025.

It is always a positive sign when a company lives up to the goals it has laid out. It is an even better sign when those goals are tied to a business revamp as large as the one that Opendoor is undertaking.

Is Opendoor in the clear?

From an operational perspective, it looks like Opendoor is making positive progress. However, it still isn't yet apparent that it can create a sustainably profitable business around house flipping. To be fair, the start-up is in the middle of an overhaul, so its financial statements are complicated right now. Still, Opendoor's gross profit was down year over year in the fourth quarter and not even enough to cover its sales expenses.

Adding in technology investments and general and administrative costs left the company with a material loss from operations. While general and administrative costs were likely higher in the quarter than they will be going forward, even reverting to historical levels would still leave the company bleeding red ink.

Opendoor's stock price rocketed higher when it brought in its new CEO. However, at this point, it has given up more than half of the gain. It is clear that investors recognize that there is still a huge amount of work to do at Opendoor despite early signs of progress. Only the most aggressive growth investors should even consider buying this stock.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.